A battle for dominance in Asia's lucrative beer market broke out on Thursday as a Thai tycoon made a $7.1 billion bid for a Singapore conglomerate, throwing into doubt Dutch giant Heineken's expansion in the region.
Thai Beverage (ThaiBev) and its partner TCC Assets offered Sg$8.7 billion to take over Singapore's Fraser and Neave (F&N), the parent of Asia-Pacific Breweries (APB), maker of Tiger Beer and other popular brands.
The two firms, controlled by Thai billionaire Charoen Sirivadhanabhakdi, said in a statement they were offering Sg$8.88 per share for the 70 percent of F&N shares they do not yet own.
F&N asked for a trading halt in its shares after the Thai bid was announced.
The all-cash offer came two weeks ahead of a September 28 shareholders' meeting called by the F&N board to approve Heineken's Sg$5.6 billion offer for its 40 percent stake in APB, which has 14 breweries across the region.
Heineken already owns 42 percent of APB and a takeover would give it a major advantage in the Asian market, where beer consumption is booming as sales fall in mature markets such as Europe.
The Thai group's offer represents a 4.3 percent premium on F&N's last traded price of Sg$8.51 on Wednesday and values the Singapore conglomerate -- also involved in property, food, soft drinks and publishing -- at Sg$12.5 billion.
ThaiBev makes Chang Beer and is also involved in food and non-alcoholic drinks.
According to Forbes business magazine, Charoen is the third richest person in Thailand with an estimated fortune of $6.2 billion as of August, with the bulk of his money coming from his beverage business.
Justin Harper, a market strategist with IG Markets Singapore, said the Thai move could scuttle Heineken's takeover of APB but Charoen's final goal remained unclear.
"It will definitely create some uncertainty among F&N shareholders as they head to the September 28 (meeting). ThaiBev have been a bit secretive in what their true intentions are and this bid sheds no real light on what these are," he told AFP.
"Thai Bev may still want to sell F&N's APB share to Heineken and use the money to purchase F&N and then break it up. They also may want to take control of F&N to stop it selling its APB stake to Heineken. Both scenarios have equal probability."
The Thai offer for F&N became mandatory after Singapore-listed ThaiBev and TCC Assets jointly crossed the 30 percent ownership level.
"From a financial discipline perspective, ThaiBev has determined that it will not incur additional debt or expend any funds to acquire more F&N Shares or to make an offer for F&N," it said in a filing to the Singapore Exchange.
Thapana Sirivadhanabhakdi, chief executive of ThaiBev, said: "We believe the offer represents an opportunity for F&N shareholders to realise the value of their investment in cash and to make a complete exit from F&N."
"We hold F&N in high regard and we believe its long-established track record and success in its core businesses will be beneficial to our group."
F&N has a diversified portfolio but the crown jewel is its stake in APB.
APB reported in August that its revenues for the third quarter to June rose almost 10 percent to Sg$781.33 million from a year ago.